401(k)s are popular with employees because they provide an efficient tax advantaged way to save for retirement. They are excellent employee benefit tools as a way to attract and retain employees. Any of the 4 profit sharing allocation methods can be used in a 401(k) plan.
Safe Harbor options to avoid discrimination testing are:
• Match of 100% on the first 3% plus 50% of the next 2%; or
• Profit Sharing of 3% to all eligible employees.
Both options are 100% vested.